Business丨China may keep RMB stable if Fed cuts rat...

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Talk about the potential for a drastic yuan rebound started after Bloomberg published a report on Tuesday. Stephen Jen, chief executive of British hedge fund Eurizon SLJ Capital, was quoted in the report as saying that Chinese companies may be enticed to sell a $1 trillion pile of dollar-denominated assets if/when the US cuts interest rates, which could strengthen the yuan by up to 10 percent.

Jen's remarks came after US Federal Reserve Chair Jerome Powell indicated on Friday that "the time has come" for interest rate cuts. His words led the market to bet that the Fed will start cutting its target range of interest rates, which now stands at 5.25 to 5.5 percent, at the next Federal Open Market Committee meeting on Sept 17 and 18.

"In the event of a Fed rate cut, we anticipate a redirection of international capital flows toward China, potentially prompting a reflow of capital of Chinese enterprises," said Xiong Aizong, a senior research fellow at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences.

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